TransCanada expects to begin delivering oil January 3 to Texas on the southern portion of its Keystone pipeline, allowing more crude to leave a key delivery hub in Oklahoma.

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By DAN MURTAUGH

CALGARY (Bloomberg) -- TransCanada expects
to begin delivering oil January 3 to Texas on the southern
portion of its Keystone pipeline, allowing more crude to leave
a key delivery hub in Oklahoma.

TransCanadas Gulf Coast pipeline can carry 700,000 bpd
of crude to Port Arthur, Texas, from Cushing, Oklahoma. The
Calgary-based company disclosed its plan to start service on
January 3 in a filing with the United States Federal Energy
Regulatory Commission.

That adds to the capacity of the Seaway pipeline owned by
Enterprise Products Partners and Enbridge, which now carries
400,000 bpd to Houston from Cushing. The operators have said
they expect Seaways capacity to reach 850,000 in the
first half of 2014.

Its bullish for WTI because were going to
be pulling more barrels out of Cushing, said Carl Larry,
president of Oil Outlooks & Opinions in Houston. Once
they start taking out, say 500,000 bpd, along with Seaway
expanding, its going to pull crude out of Cushing a bit
faster than its going in.

Bottleneck Moving

This pipeline startup enables refineries to move
significant amount of crude from the Mid-continent to the Gulf
Coast, said Andy Lipow, president of Lipow Oil Associates
in Houston. That reinforces that the logistical
bottleneck is moving from Cushing to Gulf Coast.

Building the 700,000 bpd Gulf Coast line will cost $2.3
billion, TransCanada has said. It began construction in August 2012. After
the lines initial capacity is reached, it will be able to
expand to 830,000 bpd, according to the company.

The pipeline was originally part of TransCanadas
Keystone XL project, which entered its sixth
year of United States review last month. President Barack Obama
initially rejected the conduit in January 2012, citing concerns
with its path through ecologically sensitive lands in
Nebraska.

TransCanada reapplied with a new Nebraska route last year
and split the project in two, proceeding with the
Gulf Coast project, the southern portion of the
network that doesnt require federal permission.

The $5.4 billion northern section can start no sooner than
two years after it gets a United States presidential permit,
which is expected early next year, CEO Russ Girling said
November 19.

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